Section 80G of Income Tax Act

As per the provisions of section 80G of the Income Tax Act, 1961, tax deduction can be claimed for donations to various charitable organisations. While there is no absolute limit on the amount that you can donate, there are limits depending on which type of organisation you are making monetary donations to. Section 80G provides 50-100% exemption on contributions made to some government relief funds and 50% deduction up to 10% of income in case of some NGOs registered under the Income Tax Act. We will explain the different sub-limits below.

Eligibility

Any taxpayer whether resident or non-resident can claim an income tax deduction for donations made to charitable organizations. Section 80G provides the benefit of deduction to individuals or firms/NGOs/partnerships/LLPs as well as companies. NRI taxpayers can also take the benefit of Section 80G.

Exemption Limits under Section 80G

100% Deduction Without Any Limit:

Any amount contributed to the following authorities/organisations as a donation will be eligible for 100% tax deduction under the Income Tax Act, 1961.

Welfare Fund of Armed Forces (Army/ Naval/ Air Force)

Chief Minister’s Relief Fund (LG’s) of any State (Union Territory)

National Illness Assistance Fund

National Trust for well-being of people having cerebral palsy, Autism, multiple disabilities and Mental Retardation

CM’s Earthquake Relief Fund, Maharashtra

Fund for Development of Technology and Application

National Blood Transfusion Council

National Children’s Fund

Zila Saksharta Samiti

Fund for Providing Medical Assistance to Poor by the State Government

National Fund for Control of Drug Abuse

National Defence Fund

Andhra Pradesh CM’s Cyclone Relief Fund, 1996

National Sports Fund

Swachh Bharat Kosh

Approved University or Educational Institution of National Importance like IIT, NIT etc.

National Cultural Fund

PM’s National Relief Fund

Clean Ganga Fund

Africa (Public Contributions – India) Fund

National Foundation for Communal Harmony

The Maharashtra CM’s Relief Fund

100% Deduction Subject to Limit:

Contributions made to the following authorities are eligible for 100% deduction subject to a limit equal to 10% of adjusted gross total income:

Contributions made by a company to IOA i.e. Indian Olympic Association or to other notified institution/association formed in India with the purpose of developing the infrastructure for sports or for sponsoring sports in India.

Any approved authority/institution/association established with the objective of promoting family planning

50% Deduction Without Any Limit:

Any amount contributed to the following set of authorities as a donation will be eligible for 50% tax deduction of the total contribution made by the tax assessee.

Rajiv Gandhi Foundation

Jawaharlal Nehru Memorial Fund

PM’s Drought Relief Fund

Indira Gandhi Memorial Trust

50% Deduction Subject to Limit:

Contributions made to the below authorities are eligible for a 50% deduction subject to 10% of adjusted gross total income:

Government/local authority established for charitable purposes except family planning.

For carrying out repairs and maintenance/renovation of the notified mosque, temples, church, gurudwara or such religious places.

Any corporation formed for encouraging the minority community and is referred to in Section 10(26BB) of the Income Tax Act.

Establishment or authority formed in India with the aim of providing affordable housing or for the purpose of improvement of cities/villages

Fund or Institution satisfying the conditions mentioned in Section 80G(5)

What is adjusted gross total income?

Gross total income is the income earned from all sources during a financial year by an assessee excluding long term capital gains, certain types of income earned by NRIs and other types of deductions under Sections 80CCC to 80U (excluding section 80G). The adjusted gross total income is arrived at by taking into account the following:

Gross Total Income

XXX

Less: LTCG i.e. Long term Capital Gains

-XX

Less: Income earned under section 115A, 115D, 115AB/C/D which is regarding NRI and foreign companies.

Mode of Payment

Tax deductions for donations under section 80G can be claimed only when contributions have been made via cheque/ demand draft or any other cashless/electronic mode of payment. Contributions made in cash only upto Rs. 2,000 are eligible for the tax deduction. Contributions made in kind such as clothes, medicines or food etc. are not eligible for claiming tax benefits u/s 80G.

Section 80GGA

Section 80GGA allows tax deduction on donations made to organizations involved in scientific research or rural development. This section is available to all taxpayers other than those who have income from business and profession.

This deduction is available to:

Any sum paid to a scientific research association or to a University, college or other institution to be used for scientific research. These institutions such have approval under Section 35(1)(ii) of the Income Tax Act, 1961.

Any sum paid to an institution undertaking rural development or training people involved in rural development, approved under section 35CCA/35CC.

FAQs

Q. Who can make a contribution as per section 80G?

Individuals, firms, LLPs, partnerships and companies can make contributions to welfare institutions for availing deduction under section 80G. NRIs can also get the benefit of this section.

Q. Are contributions made in kind eligible for deduction u/s 80G?

No. Contributions made in kind are not eligible for deduction under section 80G of the Income Tax Act.

Q. Can I make a contribution to foreign trust?

No. Contribution made to a foreign trust is not eligible for deduction under section 80G.

Q. Can I make a contribution to political parties under section 80G?

Though you can contribute to a political party, you cannot avail deduction under section 80G. A separate section 80GGB and section 80GGC have been introduced in the Income Tax Act for making donations towards political parties.

Money donated towards a political party which is registered under section 29A of the representation of people act or electoral trust can be claimed as deduction.

In case an Indian company makes a contribution towards a political party, the deduction can be claimed under section 80GGB. And if a contribution is made by any other person (excluding local authority and every artificial juridical person wholly or partly funded by the government), the deduction can be claimed under section 80GGC. However, contributions should be done in cheque or demand draft or by internet banking. Donations made in cash are not eligible for deductions.

Q. What if the contribution is deducted from the employee’s salary and the trust receipt is in the name of the employer?

Sometimes, contributions are made from the salary account of the employee and the receipt is issued in the name of the employer. In such cases, the employee will have to get a certificate from the employer stating that the donation is made out of the salary account of the employee. After obtaining this certificate, the employee can avail deduction for the donation made.

Q. What should be the payment mode for availing this deduction?

Payment can be made in modes like cheque, demand draft or cash. If payment is made in cash, a maximum limit is imposed by the act. Tax deduction is not allowed for donations made in cash exceeding Rs. 2,000.

Q.What is the maximum amount which can be donated in cash?

Till the financial year 2016-17, a maximum limit of Rs.10,000/- on cash donations was imposed by the Income Tax Act. However, this has been changed and reduced from the financial year 2017-18. Now, the maximum limit of donation which can be made in cash is Rs.2000/- to avail tax benefits.

Q. Can I avail full tax deduction for the entire money contributed towards section 80G?

There are restrictions on the eligible amount for the deduction. If you contribute towards specified funds, you can avail 100% deduction on the money donated otherwise you can avail 50% of the money donated. Again, under each of the 100% or 50% deduction category, there are certain funds which provide full tax deduction on donations while some other funds only provide tax benefit on contributions upto 10% of the adjusted gross income.

How donations are categorized u/s 80G?

Donations or contributions are broadly categorized into 4 types:

100% deduction without any limit

100% deduction subject to a limit

50% deduction without any limit

50% deduction subject to a limit

What are the documents required to claim deduction u/s 80G?

The assessee i.e. taxpayer will have to provide the following documents for the purpose of availing deduction:

Receipt for donation

Issuing a receipt for the donations made is mandatory. The receipt should contain information about the trust and the contributor like the name and address of the trust, PAN number of the trust, name of the contributor, amount contributed by him in words as well as in figures.

If the contribution made is eligible for 100% deduction, the contributor should obtain Form 58 from the trust. Without this form, the assessee will not be eligible to get a 100% deduction on the amount donated.

Registration number

The registration number is being issued by the income tax department u/s 80G. This registration number should be mandatorily mentioned on the receipt of donations.

Q. Validity of the trust registration number and a copy of 80G certificate

Generally, the registration number is issued for a period of the 2 years and the trust has to renew the registration number after every two years. The registration should be in force at the time of making a donation to avail deduction u/s 80G. If the trust ceases to be valid, donations made cannot be availed as a deduction.

Also, obtain a copy of the 80G certificate with the receipt of the donation made to the trust.

Q. Can a donation be made by an NRI?

Yes. NRIs can make donations and avail deduction u/s 80G of the Income Tax Act, provided the contributions are made to eligible institutions.